In a significant shift from previous trends, Nigerian spending on foreign education plummeted to $38.17 million in the first quarter of 2024, according to the Central Bank of Nigeria’s (CBN) quarterly statistical bulletin, marking an 83% decrease from the $218.87 million recorded during the same period last year.
Notably, this reduction comes alongside a 54% increase compared to the $24.82 million spent in the fourth quarter of 2023, highlighting a complex and evolving financial landscape for Nigerians seeking education abroad.
However, this sharp decline in foreign exchange (FX) spending on education is not occurring in isolation. It aligns with broader global and domestic changes affecting international student mobility and financial policies.
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A significant factor contributing to this downturn is the recent introduction of stringent CBN regulations designed to curb the outflow of foreign currency, especially in light of Nigeria’s ongoing economic challenges significantly buoyed by FX illiquidity.
The CBN, under the leadership of Governor Yemi Cardoso, has been vocal about the economic strain caused by substantial spending on foreign education and medical tourism. In a presentation to the House of Representatives, Cardoso revealed that a staggering $40 billion had been spent on these sectors, compounding Nigeria’s foreign exchange crisis and contributing to the devaluation of the Naira.
The CBN’s measures include a cap of $10,000 per customer annually for foreign currency purchases related to school fees, requiring these transactions to be conducted through Bureau De Change (BDC) operators’ domiciliary accounts with Nigerian banks. This new policy is intended to ensure that funds are directly paid to educational institutions, limiting the potential for misuse and excessive FX outflows.
The CBN’s new guidelines also demand a thorough documentation process for educational transactions. These include a completed e-Form A, proof of admission or course registration, an invoice from the educational institution, and additional documentation for postgraduate studies. For medical expenses, a similar cap of $5,000 per annum has been implemented, requiring direct transfers from BDCs to the medical facility abroad, supported by referral letters and cost estimates.
However, the broader international context also plays a crucial role in this scenario. The downturn in Nigerian spending on foreign education coincides with a noticeable decline in international student enrollment in the UK, a popular destination for Nigerian students. This trend is linked to the UK’s recent tightening of immigration policies, which have made it more challenging for international students to secure visas and study permits.
The Office for Students (OfS) in the UK has reported a sharp decline in student applications, leading to a financial crisis across many universities. According to the OfS annual report, 40% of England’s universities are projected to operate with deficits in the 2023-24 academic year, with many facing low cash flows and the risk of closure if they cannot adapt their funding models.
Data from Universities UK (UUK) and Enroly corroborate these findings, showing a significant drop in international student interest. A survey conducted by UUK across 73 universities revealed a 44% decrease in international postgraduate student enrollments in January compared to the previous year.
Enroly’s data further indicates a decline in deposit payments from international students, suggesting reduced interest in studying in the UK. This reduction in international students, who often pay higher fees, poses a significant financial challenge for UK universities, particularly those relying heavily on income from these students.
The backdrop of these international shifts, combined with Nigeria’s internal economic policies, underscores a critical juncture for Nigerian students and families. The CBN’s stringent measures, while aimed at stabilizing the Naira and reducing FX pressures, limit access to foreign education and significantly impact the aspirations of many Nigerians seeking higher education abroad.
Meanwhile, the reduction in foreign education spending has occurred alongside a significant increase in spending on health-related and social services. The CBN data indicate a 122% rise in spending from $1.04 million in Q1 2023 to $2.31 million in the same period in 2024, marking a 485% increase from Q4 2023’s $0.39 million. This shift suggests a shift to healthcare spending over education.
While the current measures by the CBN seem to be achieving its aim to reduce the FX outflow associated with foreign education, there is growing concern about their impact on access to quality education for Nigerian students, especially as the nation’s education sector remains poor.